- Opened positions on gold are strongly bullish (70% long / 30% short)
- The immediate resistance for the yellow metal is currently located at 1,171
- At the same time, the nearby support for the bullion is placed at 1,154
- Upcoming events in the next 72 hours: France and Italy Industrial Production (May), EU Leaders Special Summit, UK Trade Balance (May), Canada Employment Change/Unemployment Rate (Jun), China Trade Balance (Jun), Japan Industrial Production (May)
Gold traded above a four-month low on Friday, spurred by a stronger Euro amid signs of progress in debt-stricken Greece's attempts to unlock bailout funds from its European creditors. The precious metal is set for a third weekly decline in a row, due to weak physical demand in top consuming countries, China and India. Athens submitted belt-tightening proposals on Thursday, asking in return a three-year bailout loan of 53.5 billion euros. The proposal will be presented to the Greek Parliament later today and is set to be discusses at the European Union summit in Brussels on Sunday.
Meanwhile, the number of people applying for unemployment benefits rose more than expected in the week ended 4 July. However, the increase was likely due to temporary auto plant shutdowns rather than underlying weakness in the labour market. US initial jobless claims rose by 15,000 to 297,000 last week, according to the Labor Department, hitting the highest level since 327,000 applications were filed in the last week of February. Even with the recent rises, benefit applications, which are a proxy for layoffs, remain at low levels indicating a strengthening labour market that has enjoyed solid employment gains.
Canadian jobless rate to increase in June
Today the labour market statistics from Canada is expected by 12:30 PM GMT. Employment is presently forecasted to have decreased by 10,000 in June, while the unemployment rate is likely to reveal a rise from 6.8% to 6.9%. Meanwhile, on Monday both Chinese trade balance for June and Japanese industrial production for May are due to be published in the early morning.XAU/USD develops inside bearish wedge pattern on daily chart
Since the second quarter of 2013, the bullion has been developing inside the falling wedge pattern, meaning that trading range is decreasing as time goes on. Two pattern's boundaries are represented by the upper trend-line around 1,270 and pattern's support at 1,115. Among recent developments, in March 2015 the yellow metal resumed gaining value, even without touching the lower trend-line, but the growth stalled beneath the 2009 high at 1,230. In the foreseeable future the rally is likely to be limited and the bullion should be driven by the 200-day SMA around 1,200, which has a slight bearish bias. Some short-term gains in the direction of the long-term downtrend (1,270) are not completely off the table, but bears are eventually going to overtake a lead and drive the metal back to the south. The overall negative tendency for gold seems to be the case in the long run, while at the end of this year the precious metal should to consolidate around 1,150, in case the present trend persists.Daily chart
US jobless claims have initially sent the precious metal as high at 1,168. While this daily high was somewhat below the nearest resistance at 1,171 (weekly PP), the XAU/USD cross failed to extend gains and was forced to slide back. Another attempt to grow is being undertaken on Friday, but the 1,171 mark still seems to be too far away for bulls. The risks of a failure are not off the table as well, with weekly and monthly technical indicators suggesting that gold has to be sold on the market.
Hourly chart
SWFX sentiment strongly bullish toward gold
Meanwhile, OANDA's bulls are in the safe majority with 79.03% of all current positions. Gold's sentiment at there is the second most positive among all major crosses at the moment. Saxo Bank market participants are also optimistic towards to the precious metal, as there are 71% of bullish trades registered in the morning on July 10.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jun 10 and Jul 10 expect, on average, to see Gold trading just below 1,160 by the end of October. At the same time, 54% of them still believe the bullion will be strongly above 1,150 in three months, while 32% of traders surveyed forecast the bullion to trade in the range between 1,100 and 1,250.